Is your debt situation delaying your plans for parenthood? You’re not alone.
In a study published on Brides.com, it is revealed that 28% of the surveyed adults admitted to delaying their plans to start a family because of their debt. You cannot really blame these couples for doing it. Being a parent can be quite fulfilling, but also very expensive. Once you become a parent, your child will become your priority. If you still have some outstanding debt, it might be harder to stay committed to making payments. When your finances become tight, you need to prioritize the needs of your children and put your debt payments in the backseat.
When that happens, your finances can get into a lot of trouble.
This is probably why some couples choose to pay down debt before they start growing their family.
Can you be parents despite your credit situation?
The answer to that is yes, you can be a parent even if you have debt.
The most important thing is that you understand the cost involved. According to an article published on CNN.com, a middle-income couple is expected to spend $233,610 to raise two children – at least if these kids are born in 2015. Thanks to the inflation rate, this amount will grow over time.
Instead of focusing on how your debt situation will make it hard to raise a kid, there are some things that you can actually do to make it affordable.
- Save up for it. While you are still in the childbearing stage, the two of you should continue working, but you should start living on a single income. You have to get used to it anyway. You can use the second income to give your savings a boost.
- Look for an alternate source of income. For the parent that will stay at home to care for the kids, he or she should start looking for ways to earn from home. There are a lot of online jobs that you can look into – even if it’s just part-time. That way, you can save on childcare costs and still have two sources of income.
- Rely on hand-me-downs. Your child does not have to own new things all the time. There is nothing wrong with buying second-hand stuff as long as they are clean. Of course, for the safety of your child, make sure you choose what you will buy used.
These tips can help you continue paying off your debts even as you start your journey as new parents.
How to aggressively pay off debt before becoming parents
Your efforts to correct your debt situation should start the moment you decide that you want to become parents. This will give you enough time to significantly reduce your debt, while you are still trying to conceive.
According to a study conducted by the National Endowment for Financial Education, 9 out of 10 millennial parents have debt. For some of them, it is starting to cause a rift in their marriage, and in some cases, it is even negatively affecting their children.
To avoid this, here are tips that will help you pay off your debts aggressively.
- Live on one income. You may want to start this while you are still conceiving. You have to get used to it anyway – at least if one of you intend to take care of the kids yourself. This will give you a long transition period that will make you well adjusted by the time the baby arrives.
- Use the second income wisely. There are two important goals to save up for right now. Use half of the second income to save for the baby and the other half to get rid of your debt situation.
- Enroll in a debt relief program. Choose a debt solution that can help you get out of debt in 2 years or so. Debt settlement is one option. You can also opt for debt management. The shorter the program, the better it will be by the time the baby is born.
- Stop taking on debt. As difficult as it may be, you should stop paying on credit. Pay down what you have at the moment, and do not borrow any more money.
By eliminating your debt situation, you can concentrate on saving up for whatever your child will need.
Tips to prepare your finances for parenthood
Without a doubt, parenthood can be difficult – even after solving your debt problem. There are things that you still need to do in order to make your finances strong enough to survive parenthood. You still have a long way to go and these tips should prove to be useful.
- Check your health insurance policy. This will be very useful during childbirth – and any other health concern of the baby. It will keep costs low. After all medical bills can quickly stack up and lead you into another debt situation.
- Come up with a pre-baby and post-delivery budget. This will allow you to focus on a budget and avoid falling short. Most of the time, people end up in debt because they are forced to pay beyond their financial capabilities. Childbirth can be expensive – especially if you are not prepared for it.
- Build your emergency fund. This fund will really help you keep a lid on debt. In case there is a need to spend beyond your budget, you can dip into this emergency fund instead of borrowing money.
- Shop for a life insurance policy. Finally, you should consider updating your insurance policy – especially after your baby is born. It will help secure the future of your family in case something happens to you.
As you can see, your debt situation does not have to delay your dreams of becoming a parent. But that does not mean it won’t require extra effort to improve your situation. The thing is, if you plan it carefully, you can be financially prepared even before your baby is born.